Prologis Sells U.K. Portfolio to Blackstone

Prologis Inc. an owner, operator and developer of industrial real estate, completed the sale of a 3.5-millions-sq.-ft. portfolio of U.K. industrial properties to Blackstone. The aggregate sales price was approximately $335 million, of which $295 million was Prologis' share of the proceeds.

The portfolio comprises 13 properties located in England's Midlands and Yorkshire. The properties are 100 percent leased with an average unexpired lease term that exceeds nine years.

"We were pleased with the amount of interest this portfolio garnered as the combination of quality assets and lease term appealed to multiple investors," Prologis Europe President Philip Dunne said in a statement. "We have sold this portfolio as it no longer fit within our investment strategy, and offered us the ability to redeploy our capital."

As of December 31, 2011 Prologis had approximately 21 million sq. ft. in properties and assets under development in the United Kingdom.

This is the second large portfolio of assets Prologis has sold to Blackstone in the past two years. In Oct. 2010, the firm sold a North American industrial portfolio and a minority interest in a hotel property to the private equity firm for $1.02 billion. The assets sold then included 180 North American industrial properties, a minority interest in the Hilton New Orleans Riverside and ProLogis' 20 percent interest in ProLogis North American Property Funds VI - VIII.

Financing agreement

In separate news for Prologis, the firm entered into a senior term loan agreement with nine relationship lenders including Bank of America N.A., as administrative agent. The company may obtain loans in U.S. dollars, euros, Japanese yen, and British pounds in an aggregate amount not to exceed approximately $634 million. An accordion feature included in the loan agreement would permit a maximum increase to approximately $1.3 billion, subject to obtaining additional lender commitments.

The loan agreement is scheduled to mature on February 2, 2014; however, the company may extend the maturity date three times, in each case up to one year, subject to satisfaction of certain conditions and payment of an extension fee. Pricing under the facility is based upon the public debt ratings of the company's operating partnership and is currently at LIBOR plus 150 basis points. This represents a weighted average price reduction of approximately 67 basis points compared to the corporate bank facilities that were refinanced by this new facility.